At Le Caffe in Tirana the waiters wore smart red shirts and moved briskly round the coolly minimalist interior. Wall-to-ceiling windows looked out over an ornamental pool, and beyond that the greenery of Parku Rinia - 'Young People's Park' - where families were lazing in the sun. My G&T was ice-cold, served with lime. Not bad for a city generally considered a byword for hopeless backwardness.

When I told people I was taking a short break in Albania, the general reaction was disbelief. Cut off from the world for nearly 50 years under the dictatorship of Enver Hoxha; liberated by a revolution in 1990, only to descend into anarchy and violence - 'depressed', 'dangerous' and 'corrupt' were a few of the descriptions that came up. But a fortnight ago British Airways began a new service to Tirana, and tour operators are taking an interest. Do they know something we don't?

First impressions were not good. The road from the airport was potholed and plagued by lunatic drivers. In the Hoxha years there were only 600 cars in the country, all owned by communist bigwigs; now there are thousands, but they are still a comparative novelty for both drivers and pedestrians. As we crawled through the darkness, cars barged past with their horns blaring and pedestrians wandered aimlessly into the road. Dust and exhaust fumes hung over the city like a cloud. What a bloody mess.

Things picked up a bit at the Hotel Brilant, a small, family run place in a side street near the parliament building with neat, clean rooms and a homely basement restaurant. And next morning I woke to a very different Tirana.

The city was alive with colour. Its charismatic mayor, a former artist called Edi Rama, has painted the town red - and blue, green and orange. With the help of local students, the grim communist era apartment blocks have been decked out in blazing colours, giving them a bizarre, playful effect. 'It was intended as a shock,' said Rama. 'People's surroundings had been so grey for so long.' He also planted thousands of trees and bulldozed the illegal houses and brothels that had lined Tirana's parks. Now the skyline bristles with construction projects. No wonder they re-elected him.

But Tirana remains a case study in deranged urban planning. Half the city was laid out by Mussolini's fascists, who occupied it for four years. They erected some pleasant neo-classical buildings, but ruined the effect by constructing vast boulevards and gaping squares. The other half is the work of Hoxha and his cronies. In Skanderberg Square, Hoxha knocked down the old city bazaar and threw up a clutch of brutal concrete horrors. An elegant, Ottoman city had its heart ripped out.

Yet there are signs of hope and revival everywhere. The government has crime under control, the economy is picking up and the citizens of Tirana are struggling to their feet, dazed but optimistic. You stumble upon brave little parks beneath apartment blocks; discover open-air cafes everywhere. The hideous pyramid of the Hoxha museum has been converted into a culture centre and teenagers amuse themselves by sliding down its sloping walls. Tirana's natives are reclaiming the city.

And nowhere is this happening more gratifyingly than in the Bllok area, once the home of party apparatchiks. The villas of the ruling elite, including Hoxha's, are now restaurants, cafes, shops and clubs. I drank Tirana beer at 70p a pop, watching the parade of leggy girls and spiky-haired guys. Not a McDonald's, Starbucks or souvenir shop in sight. My respect for Albanians was growing all the time. Quick-witted and fast-talking, they are phlegmatic about their pariah status. 'Tirana isn't Albania,' said the barman at Quo Vadis. 'The asylum seekers and the petty criminals that the rest of Europe knows are mostly from the countryside.'

Fair enough, but a fair amount of ducking and diving goes on in Tirana too. Dodgy money-changers line one side of Skanderberg Square; in the Bllok you can buy pirate CDs and DVDs for a quid. Apparently there's even a shop that just sells stolen mobile phones.

Albania is a Muslim country and the iron law of hospitality prevails. I gave up trying to buy drinks for strangers and got used to the hand-on-heart gesture they made when buying one for me. Albanian Islam is broad-based and tolerant, with Tirana's Catholic and Orthodox churches within spitting distance of the city's mosque. 'We're patriotic first and religious second,' said one man.

The 18th-century Et'hem Bey mosque, incidentally, is one of Tirana's few tourist sights. Others include an elegant 19th-century clock tower (showing the wrong time), and a medieval tanner's bridge. The National Historical Museum has some chilling exhibits from the Hoxha era, but Tirana is really about soaking up the atmosphere of a fast-paced city reinventing itself before your eyes. You hang out in cafes, you sip coffee, you talk - and you gorge yourself at knockdown prices. In a restaurant called Emblema I worked my way through half a dozen courses including kackavall fried cheese and a spicy lamb stew. There were two jugs on the table, one of surprisingly good local wine, the other dhalle, the yoghurt drink ubiquitous in the Balkans. Total cost: £6.

On my last day, I called in for lunch at the Living Room. Tirana's coolest bar, it's a 1920s mansion with a rooftop terrace and hip restaurant. But the restaurant was closed and the owners were having a private meal with friends. However, they invited me in, shared their food and refused to take any money. Can you think of a single other city in Europe where that might happen? It may not be the new Prague, but the new Tirana is coming along nicely.

The hot tips that went ice cold

The travel industry is constantly searching for the 'next big thing' but sometimes they don't quite live up to the hype.

Aviemore 'The Ibiza of the Cairngorms' according to newspaper reports from 1998, the Scottish resort never really caught on as a clubbers' destination, possibly due to the abundant concrete-block architecture and lack of sun-kissed beaches.

Bratislava Hailed as 'the new Prague' shortly before Slovakia's entrance to the EU, it still hasn't made it into the premier league of city-break destinations.

Alpha One Airways The new airline launched by a 19-year-old last year got acres of press coverage, and a profile in the Sunday Times dubbed him 'Baby Branson'. Despite the good start, the airline only ran for six weeks, and today the phones are dead and the website says 'under construction'.

Water Sommeliers Introduced into five-star hotels in a mad rush in 2004, to help diners find water with the right 'mouth feel' to accompany their food, they were the height of pretentiousness. Most have now been quietly dropped.

Essentials

Paul Mansfield travelled with Regent Holidays (0117 921 1711; www.regent-holidays.co.uk). Three nights at the Hotel Brilant costs from £345 per person B&B, including flights. British Airways (0870 850 9850; www.ba.com) flies there three times a week from £212 return. You can download the Tirana in your Pocket guide from www.inyourpocket.com; the Bradt Travel Guide to Albania is published in May.

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